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OST-2013-0031 - Pacific Airways and PM Air v. Scott Aviation - Anti-Competitive, Deceptive and Unfair Business Practices


OST-2012-0178 - Scott Aviation - Certificate of Public Convenience Necessity - Interstate Scheduled


Pacific Airways, Inc. and PM Air, LLC v. Scott Aviation

OST-2013-0031 - Complaint Against Scott Aviation

February 1, 2013

Complaint Against Scott Aviation for Anti-Competitive, Deceptive and Unfair Business Practices While Engaging in Interstate Air Commerce Without Authority

Scott/IAX Air, LLC d/b/a Island Air Express, having agreed to cease and desist the numerous violations of Federal law cited by the Department in Order 2012-12-16, continues its illegal practices unabated. Scott/IAX continues to advertise its scheduled services on an unrestricted website that can be viewed from outside the State of Alaska. It continues to operate the same unrestricted, interstate toll-free reservations telephone line, 1-888-387-8989. The calls are answered at its home base in Craig, and the recorded message greeting callers makes no mention of its intra-state only authority. It continues to accept interstate connecting reservations from its website, and continues to list connecting schedules with Alaska Airlines interstate service on its website. It clearly advertises its convenient connecting service to and from Alaska Airlines interstate flights in the regional newspaper circulated on Prince of Wales Island. That ad contains no disclaimer or limitation on its commercial authority. While claiming to be serving only the needs of local O&D passengers, Scott/IAX continues to alter its schedules, varying the number and timing of its flights to coincide exactly with the change in interstate flights by Alaska Airlines at Ketchikan International Airport. Despite claiming to serve only local Prince of Wales to Ketchikan passenger, Scott/IAX operate only at Ketchikan International Airport and provides no service directly to the City and Borough of Ketchikan. As the Department found in the Simmons case, service only to an interstate airport is a clear indication of intent to offer interstate service. Finally, Scott/IAX has made no materials change in its operations or website to reflect its complete lack of Federal commercial authority. Its web site continues to allow entry of connecting interstate Alaska Airlines flights.

Throughout this process, Scott/IAX has obfuscated, deceived and covered up its true intent, while continuously delaying settlement of this matter to maximize its revenue diversion from properly certificated competitors. It delayed and opposed settlement of the enforcement matter until it had time to apply for a certificate of public convenience and necessity and had satisfied all of the Air Carrier Fitness information requests. The only change made to its web site was inclusion of an obscure and abstruse phrase relating to full FAA authority for IFR operations without any mention of commercial authority. Since the issuance of the Consent Order it has made no changes whatever.

The violations noted in Order 2012-12-16 were clearly unfair and deceptive business practices and anti-competitive behavior. The continued violations are not only violations of the terms of the Consent Order, but a new violations and evidence of fraudulent intent by Scott/IAX when in agreed to cease and desist its unlawful practices and when it filed its application for a certificate of public convenience and necessity.

By: Hank Myers, 425-830-4265


February 20, 2013

Answer of Scott Air to Complaint of Pacific Airways & PM Air

It is particularly noteworthy that Pacific and PM collectively constitute 2 of the 3 competitors of Applicant in the immediate local region in the single city-pair Alaska market operated by Scott. In that connection, as the Department is well aware, Pacific and Promech through their representative Myers have for the past 6 months repeatedly used the regulatory process to engage in a veritable campaign of harassment directed at Applicant, involving substantial and repeated misrepresentations of fact which Applicant has at each stage been obliged to address and rebut. The instant §302.404 Formal Complaint filing of Complainants is but the latest phase of Complainants' campaign and, once again, is replete with outright misstatements and distortions of fact which Applicant addresses and rebuts herein. If, as anticipated, Complainants intend to file unauthorized4 sur-reply upon sur-reply herein, those filings should be rejected.

Consistent with their conduct throughout their over 6-month crusade against Respondent, the Complaint herein is replete with both deliberate distortions of fact as well as outright misstatements of fact. In making these allegations though, Complainants' fail to advise the Department that both Complainants Promech and Pacific are in fact existing customers and currently use Scott's intra-state services. Promech started using Scott's services in 2008, including when the weather is bad and they cannot fly. For example, Promech has since 2008 paid Scott at least $57,894 for its services, consisting of: $2,240 in 2008, $1,900 in 2009, $4,800 for 2010, $25,615 for 2011 and $23,180 in 2012. These payments were for Scott flight services, including for flights operated after the July filing of their DOT informal complaint. Similarly, Pacific started using Scott's service in 2011, mainly for freight, but Pacific used Scott as recently as January 30, 2013 (Le.: after filing the complaint herein).

Counsel: Pierre Murphy, 202-776-3980


February 8, 2013

Alaska Offshore Adventures in Support of Island Air Express

I recently wrote a letter to you in support of Island Air Express becoming a US Mail service provider to Klawock, Alaska. I am confident that you must have received a number of similar letters from my friends and neighbors; the issue is a very important one for us.

It should be clear to anyone interested in the matter that Island Air Express' ability to provide IFR service to Klawock means the highest level of safe and reliable service possible. Are there any other criteria by which to evaluate the matter?

By: David Dawley, 907-529-1050

February 8, 2013

B-3 Contractors in Support of Island Air Express

We write this letter in support of the application by Island Air Express for a Certificate of Public Convenience that would grant them authority to transport mail for the City of Klawock, Alaska on Prince of Wales Island.

Island Air Express is the only scheduled carrier flying into Klawock from Ketchikan, from which location our mail and freight is transported. We have waited for over a week at times for mail that is in a “holding pattern” somewhere because of weather. This winter season, as with all others before it, mail is constantly delayed and there is no reliable schedule for one’s daily trip to the post office to pick it up. We are confident that Island Air Express can provide a much more reliable mail delivery service to all of us in Klawock, and beyond, if approved to do so.

By: Michael Bush

February 8, 2013

City of Coffman Cove in Support of Island Air Express

We have had some of the worst service for delivering the mail from Taguan Air in Ketchikan. Taguan Air, Pacific Airways and Promech Air, have displayed that the only thing their companies care about is the people who come off the cruise ships during the summer months. Some weeks our community goes without mail delivery for any reason, this puts people like me in harms way due to the prescriptions that come in the mail don’t get here in a timely manner. It has been common practice for the air carrier not to fly the mail rout for no reason.

We need to have a company like Island Air Express taking our mail.

By: Vice Mayor Bryce Brucker

February 8, 2013

Southeast Roadbuilder's in Support of Island Air Express

I represent Southeast Roadbuilder’s Inc., a commercial civil contractor on Prince of Wales Island, Alaska, dependent upon mail, freight, and passenger air service. It has come to our attention that the mail contract serving the Island and specifically Klawock is in the permitting process and Island Air’s opportunity to provide this service may be in jeopardy. This note is to express our support of allowing Island Air the opportunity to share in the mail service for the area.

By: Roger Schnabel


Order 2013-4-4
- Complaint Against Scott Aviation

Issued April 9, 2013

Order of Dismissal

We have carefully considered the complaint in Docket OST-2013-0031, and have decided to dismiss the complaint. The Petitioners have not demonstrated that Scott Air has failed to comply with the terms of Order 2012-12-16. The Petitioners do not take into account the steps taken by Scott Air to operate within its intrastate authority during the pendency of their application for authority. Additionally, none of the assertions provided by the Petitioners show evidence that to the extent that Scott Air may still be carrying more than de minimis interstate traffic.

Scott Air does not accept reservations made by out-of-state residents, as Petitioners discovered when they attempted to make purchases out-of-state. While Scott Air requests “Alaska Airlines Connecting Flight Info,” it does so in order to know if a passenger will make its flight on Scott if the Alaska flight is delayed or cancelled. While the Department understands why Scott Air asks for this information, requesting the connecting flight information can be construed to be holding out interstate service. Scott Air points out that it is not operating “connecting” service with Alaska Airlines. Scott Air does not have an interline agreement with Alaska. Passengers on Scott Air must check in for their Scott and Alaska flights separately and must check their bags separately. This issue was addressed in the consent order issued by the Department. Because Scott Air made changes to its website and reservations process, and it changed its advertisements to eliminate the references to connecting service, we find that any interstate traffic Scott Air may have carried as a result of asking for a customer’s connecting flight information subsequent to the issuance of Order 2012-12-16 was de minimis in nature.

After a thorough review of the information presented by Petitioners, we find that there is insufficient evidence that Scott Air violated the terms of Consent Order 2012-12-16 and that the intent of the order is being fulfilled.

By: Samuel Podberesky


May 30, 2013

DOT Response to Congressman Don Young (AK-At Large)

On February 1, 2013, Pacific Airways and PM Air filed a formal complaint against Scott Air alleging violations similar to the allegations Mr. Sessoms included in his complaint to Congressman Young. As a result of that filing, the Department conducted a thorough investigation of Scott Air's operations, including reviewing evidence of any interstate operations since the issuance of the consent order in December 2012. This investigation included, among other things, reviewing a detailed response from Scott Air and examining advertisements on Scott Air's website and all the information submitted by Pacific Airways and PM Air. After completing the investigation, the Department determined that Scott Air was not holding out interstate air transportation and to the extent that it was conducting interstate air transportation, such transportation was de minimis in nature and therefore permissible.

By: Samuel Podberesky

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